Written by Tom Van Woensel
City Logistics, Urban distribution, Last Mile Logistics, etc. are all names for similar concepts considering the important aspects of transportation in the urban (or city) context. The OECD (Organization for Economic Co-operation and Development) Working Group on Urban Freight Logistics defines urban goods transport as the delivery of goods in urban areas, including the backflow of waste. Freight transportation of goods (both forward flows and reverse flows) is therefore a key activity within urban areas.
Many large cities face significant challenges related to the congestion and pollution generated by the number of vehicles which need to travel within urban areas. These vehicles are one of the main causes of undesired environmental side-effects but their role is fundamental to the efficient functioning of Europe as they satisfy many of the transportation needs that occur on a day-to-day basis. Urban transportation includes not only the transportation of goods, but a significant proportion is attributed to the transportation of people.
Within the OECD countries, in 1950, 50% of the population lived in cities, 77% in 2000 and it is expected that by 2020, this will rise to 85%. Currently, 80% of the European population lives in urban areas, while about 85% of the EU’s GDP is generated in cities. The demand for urban freight transport is clearly growing, and will continue to do so.
In Europe, “ transport is the most problematic emitting sector, with upward emission trends” (European Environment Agency, 2009). Between 1990 and 2007, CO 2 emissions from transport rose by 29% in Europe. Road transport accounts for a sizable portion of CO 2 transport related emissions, nearly 73% in 2000. Within road transport related CO 2 emissions, urban traffic accounts for 40% of CO 2 emissions, and 70% of emissions of other air pollutants. In terms of traffic congestion, in Europe, every year nearly 100 billion Euros, or 1% of the EU’s GDP, are lost to the European economy as a result of this phenomenon.
An important challenge in the transition towards a sustainable urban freight transportation system is the question of how to improve the quality (e.g. carbon footprint and air quality) and quantity (e.g. freight transport movements) of the distribution activities by a better orchestration of the various physical flows. Especially in urban areas, there is a huge potential for the consolidation and coordination of distribution flows that are currently fragmented.
Although there are some initial signs of co-operation between shippers, LSPs, municipalities and retailers (e.g. “Amsterdam elektrisch”), there are not many examples of commercially successful, environmentally sustainable collaborative solutions in urban areas. Research into feasible collaborative supply chain designs, the associated business models and the critical questions of risk and revenue management, specifically in an urban context, is also limited. City logistics practices seem to be dominated by failing (and often subsidized) initiatives and typically concern very local approaches. Rather paradoxically, with the aim of reducing urban freight’s nuisance, local authorities sometimes take isolated measures that make efficient city distribution more difficult, resulting in problems and irritation for carriers as well as an increase in emissions. Local regulations, such as time windows, are often not harmonized between cities, resulting in vehicle utilization problems, inefficient transport operations, increased emissions and significant additional costs for carriers and shippers.
The focus of many projects in academia and in practice is on consolidation of distribution, and the coordination between all stakeholders involved in urban distribution, such as shippers, LSP’s, retailers, inspection bodies, and governmental authorities. The key question is how to enable the management of physical good flows such that we achieve higher load factors by maximizing the space usage within each transportation unit and efficient and green routes by minimizing the demand weighted travel times. If we can achieve fewer physical vehicles operating and spending less time within the urban environment it will result in fewer negative impacts (e.g. less congestion, less noise, fewer emissions, etc.).
Our belief is that a systematic approach towards improved consolidation and coordination generates innovative distribution concepts based on sound and sustainable business models, while meeting the objectives and restrictions set by municipalities. Additionally, it is important to determine what business models are most relevant in the scope of the urban freight transport. Examples include: time window restrictions, designated freight roads, no access for too heavy trucks, investment in parcel delivery infrastructure, multi-modal transport integration etc.
More recently, combining people and freight flows (Cargo Hitching) creates attractive business opportunities because the same transportation needs can be met with fewer vehicles and drivers. This can make socially desirable transport options economically viable in rural areas where the population is declining. In urban areas it reduces congestion and air pollution and facilitates the introduction of electric vehicles. Substantial growth and new business models are expected following the increasing freight volumes due to the Internet shopping growth and improved mode utilization (both in time and fill rate). New coordination mechanisms supported by ICT solutions leading to control towers, need to be designed to enable efficient integration. Additionally, price and sharing mechanisms have to be proposed to facilitate combining people and parcels transportation.
In order to make significant steps forward in city logistics, new out-of-the-box ideas are needed. Given new technology and real-time availability of information, it is possible to think ahead for new and challenging solutions and make a major leap forward. In small steps, logistic processes can be transformed to the physical Internet, which consists of a network with nodes (locations where freight is collected, transferred or delivered) and flows (transport movements). Commuters, carriers, public transport providers etc. may offer their remaining capacity and companies upload their transport request. Then, for each request a path from the origin to the destination through the network should be found. In such a system it is important to standardize a transport unit/container (like in sea shipping). Furthermore, advanced collaborative decision support systems are necessary to define the routes for the packages. As not all transport movements are well known in advance predictions in future supply of transport movements is important.
During the execution of the movements through these networks, the state of the network continuously changes. This requires real-time monitoring and dispatching systems, integrated in the information-sharing platform. First steps in this direction to the Physical Internet are made in various projects. Also attention in concepts for sharing capacity in passenger transport is rising with ride, bike and car sharing systems. Further development of this Physical Internet path might become crucial to work in the direction of more sustainability and profitability.
Originally published at http://estiemblog.azurewebsites.net on May 29, 2019.
